Feed the hot hand in basketball. You get the ball to the player—you get it to the player who‘s on a streak. That‘s if you‘re smart. And that‘s precisely what the presidential game plan these days has been, these last seven days, get the ball to Barack Obama, get him out there with the people, hitting his points.

Today the president was up in New Hampshire, and his message to independent voters was clear: Look at me now. I‘m out there leading the country through this tough time, when everyone else just sitting on the sidelines offering their criticism. That‘s right, Look at me now. The latest Gallup poll has his approval rating making a turn upward since the State of the Union address. Upward. So it‘s working.

Plus, “Don‘t ask, don‘t tell.” Both defense secretary Robert Gates and the chairman of the Joint Chiefs, Admiral Mike Mulligan (SIC), testified on Capitol Hill today in support of ending the policy. John McCain came out against it, but wait until you hear what John McCain told us on HARDBALL four years ago, when he was wide open to the prospect of open service.

And the Oscar nominations are out today, and we‘ll take a look at how nominated movies like “Up in the Air” and “The Hurt Locker” tell us about the dangers of our times, from unemployment to war.

Plus, today‘s the official kickoff of the 2010 primary season. By late tonight, we could see if the Republicans are united enough to perhaps turn President Obama‘s Senate seat out in Illinois from blue to red.

And finally, what percentage of Republicans think President Obama should be impeached? That‘s right, impeached. The number, if you can believe it, is astonishing. We‘ve got that in the HARDBALL “Sideshow” tonight.

Let‘s begin with the breaking news, however, from the accused Christmas Day bomber, Abdul—Abdulmutallab. Let‘s go right now to Justice Department correspondent Pete Williams. He has the information about the kind of intelligence the suspect is giving officials. Let‘s go right now—Abdulmutallab, what‘s he talking about right now? Do we know, Peter?

PETE WILLIAMS, NBC CORRESPONDENT: We know that he‘s talking more about the details of al Qaeda in Yemen, the people who helped him with the attack and the organization of al Qaeda there. And Chris, this is a big development because, as you know, the initial stage of questioning with him on Christmas Day was that the FBI questioned him for 50 minutes after he was arrested but before he went into surgery for burns on his legs. After that surgery, later on Christmas, the FBI tried to go back and resume the conversation, and he wanted none of it. He would say nothing more.

And so the FBI ultimately read him his Miranda warning, informing him of the right to remain silent. And our understanding had been that he had, in fact, been silent, that he hadn‘t given the FBI any new information since then. Well, now we know that is not the case, that, in fact, for several days, he has been talking to the FBI, we‘re told by several officials in the government, giving what they consider to be very valuable and still current information about the nature of al Qaeda in Iraq, information these officials say that the United States is aggressively chasing down.

So I guess you could say, Chris, this is an interesting development for a couple of reasons, number one because of its intelligence value—the government says it‘s still consider good, that it‘s not gone past its sell-by date—and secondly, because of the debate here in Washington about whether he‘s being handled properly. There have been many people in both parties, frankly, mostly Republicans, though, who say the government missed an opportunity, that he never should have been classified as a criminal defendant but should have been made an enemy combatant so that he could be exploited for intelligence reasons by intelligence officials. And they feel they would have gotten more out of him that way.

But what the administration says tonight is he is now talking. Now, what we don‘t know is why he‘s doing this, but I think it‘s fair to assume that one very strong possibility is that he‘s preparing to make some sort of a deal with the government in which he would plead guilty and would escape the death penalty.

MATTHEWS: So much information. What a story that is. What an amazing development. Thank you so much, Pete Williams, covering justice for NBC News.

Right now, let‘s go to President Obama, who held a town meeting up in Nashua, New Hampshire, today. “Time” magazine‘s Mark Halperin is the co-author of the huge book “Game Change,” about the last election, and “Newsweek‘s” Howard Fineman is an MSNBC political analyst.

Let‘s take a look right now at the president up there in New Hampshire.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The message you all sent when you elected me, the message that was sent this past month, is whether you‘re Democrat, Republican, independent, you‘re out of patience. You‘re out of patience with this kind of business as usual. You want us to start worrying less about our jobs and more about your jobs.

OBAMA: You want us—you want us to worry less about our election and more about solving your problems.

(END VIDEO CLIP)

MATTHEWS: Well, something‘s working. The Gallup poll, which does daily tracking, shows the president‘s job approval has been heading upward the last few days. Look at this. At the very end—at the very right end of that, you see it going up to 51 percent, after all those months of coming down, that‘s the black chart line coming down, the black line coming down. The red one is his disapproval. Finally, disapproval is starting to tick downward. After all these months, Howard, it‘s finally turning around. Tactics—maybe tactics are enough. You don‘t need strategy.

HOWARD FINEMAN, “NEWSWEEK,” MSNBC POLITICAL ANALYST: Yes, I think, going over my notes from talking to White House people before and after the Massachusetts race, I think they decided after Massachusetts, they were going to go after the Republicans. First of all, Obama‘s good at it. He was never a courtroom lawyer, but he looks good going after them, the way he did in the lion‘s den last Friday, looked good doing this.

Second, the Democrats on the Hill are not popular. Get them out of the way. Attack the Republicans, who are not popular. So it‘s a two-fer for him. Get Harry Reid and Nancy Pelosi off the stage and make it a one-on-one race between him and congressional Republicans. That‘s what he‘s trying to do.

MATTHEWS: Mark, do you think it‘s possible that he can create a phantom bad guy, a bete noir, as you do in fiction, somebody out there to vote against besides him?

MARK HALPERIN, CO-AUTHOR, “GAME CHANGE”: Well, he‘s got to do it.

He‘s got to put the Republicans on the defensive. He tried very hard to do

that. Look, they‘re two for two, Friday and today, great scheduling and

staging, by the way, going to the House Republicans, going to New

Hampshire, where it‘s got two House races up, a Senate race, a state that

the politics there are going to be a lot of focus and create energy. The

only concern I have for him in terms of success and strategy—the AP said

the president today, he—with one hand, he reached out to the Republicans

looking for the sentence here—with one hand, he reached out, but with the other hand, he slapped them.

The problem I think he has is, this is what they tried earlier in the administration, when he was popular. Destroy the Republican Party, make them so weak, they must surrender. They‘re not going to surrender. And I think for his point of view, successes here involve some bipartisan compromise. This is not the way to get it. This is going to make Republicans dig in.

MATTHEWS: Well, you know, here‘s a way he could do it. He tried a couple days ago to try to cut a deal. He got behind this idea of a commission to deal with long-term debt, deal with the entitlements, deal with all the issues Republicans care more about than Democrats do. And at the last minute, seven of those Republicans dropped away and let the thing die.

Here he is making them pay for their legislative gamesmanship. Here‘s the president taking them on, talking about the deficit commission that the Senate shot down last week. Let‘s listen.

(BEGIN VIDEO CLIP)

OBAMA: Last week, the Senate blocked a law that I had supported to create a bipartisan fiscal commission that would come up with a set of recommendations for cutting our deficits in the long term. This law failed by seven votes when seven Republicans who had co-sponsored the bill, had co-sponsored the idea, suddenly walked away from their own proposal after I endorsed it. So they make a proposal, they sign on to the bill. I say, Great, good idea. I turn around, they‘re gone. What happened?

(END VIDEO CLIP)

MATTHEWS: You know, I talked to somebody yesterday who really knows Massachusetts politics, and they said if he‘d acted like this, if the country—the Democratic Party, rather, had acted like this, they wouldn‘t have lost Massachusetts.

MATTHEWS: If they had smoked out Scott Brown, his voting record as a state senator, if they had made the focus not on his car or his good looks or the fact he hasn‘t done much, to what he has done as a politician, his long voting record on Republican issues, they could have beaten the guy.

FINEMAN: I think that‘s what they decided. Clearly, they decided that. Because before Massachusetts, the president was still talking the inside game, making deals.

MATTHEWS: Yes.

FINEMAN: Afterwards, clearly different. And I think they‘re going to take the gamble that Mark is talking about.

MATTHEWS: Yeah.

FINEMAN: This strategy now is really more like the fall of a campaign year.

MATTHEWS: Yes.

FINEMAN: He‘s doing this awfully early. But I think they felt they had no choice because Mitch McConnell and John Boehner are just not going to...

MATTHEWS: He‘s the hot shooter. I use the basketball analogy. He‘s a basketball player. He was out at a game this weekend. But he can‘t shoot all the baskets. He needs some people around him. He‘s got to sharpen up his cabinet. We had the OMB director on the other night. He‘s not a politician. Napolitano doesn‘t seem like much of a politician on the issues she‘s responsible for. He needs sharp team members, and I don‘t know who they are! Geithner‘s not a pol.

HALPERIN: I still...

MATTHEWS: Biden is, but he needs people out there shooting with him and working with him, and I don‘t see it.

HALPERIN: I still think he needs a commander-in-chief on the economy. It can‘t be him. There has to be somebody who‘s like Norman Schwarzkopf every day on TV...

MATTHEWS: Yes, or John Connally (ph)...

HALPERIN: ... saying, Jobs...

MATTHEWS: ... from the old days.

HALPERIN: Right. Jobs are going to be created, and here‘s how we‘re going to do it and...

HALPERIN: A politician, with someone sensitive about politics, but credibility with Wall Street and Main Street. He needs that. But again, I go back—Howard‘s right, this is the way he‘d be acting if he were simply trying to win the midterms. I still don‘t understand how this helps his legislative agenda this year. He‘s right on the merits. The Republicans outrageously walked away from something they‘d sponsored...

MATTHEWS: Yes.

HALPERIN: ... but that‘s not going to make them come to the table.

MATTHEWS: He needs a cabinet packed with guys like—let‘s go for the list here—Eddie Rendell of Pennsylvania, Schumer, guys that are verbal, aggressive, know how to talk and could talk to people who are middle-of-the-road voters from the suburbs and say, Here‘s the problems we face. We inherited it. Here‘s what we‘re doing about it. It ain‘t perfect, but it‘s better than what those jokers are doing.

HALPERIN: I love Joe Biden, but a plan that‘s predicated on putting him out regularly to talk is a plan that‘s got a lot of risk.

MATTHEWS: OK, well, let‘s get some—where...

(CROSSTALK)

MATTHEWS: ... sharp shooters in this administration?

HALPERIN: I think the issue on which...

MATTHEWS: I have never seen...

HALPERIN: ... they need it is the economy.

MATTHEWS: ... an administration with so few politicians in it!

HALPERIN: It‘s the economy. It‘s the same problem Bush had. Name Bush‘s three Treasury secretaries. Go. You‘ve got to have somebody in that job at a time like this who can speak like they‘re in a war for jobs for America.

FINEMAN: By default, the president‘s doing it right now, and I think he likes doing it. I think he‘s got to worry about that a little bit. And I—you know, the standard conservative criticism is that he‘s too self-involved, et cetera. I only take that halfway. He‘s very good at what he does and he‘s showing how good he is at this...

MATTHEWS: OK, let‘s take...

FINEMAN: ... kind of courtroom situation, but he can‘t do it all on his own.

MATTHEWS: OK, here he is. Let‘s take a look at the president here, hitting Wall Street today. Let‘s listen.

(BEGIN VIDEO CLIP)

OBAMA: I‘m announcing a proposal to take $30 billion of the money

that was repaid by Wall Street banks, now that they‘re back on their feet -

take that $30 billion and use it to create a new small business lending fund that will provide capital for community banks on Main Street. You combine it with my proposal back in December to continue waiving fees and increasing guarantees for SBA-backed loans, all this will help small banks do even more of what our economy needs, and that‘s ensure that small businesses are once again the engine of job growth in America. I‘m convinced we can make that happen.

FINEMAN: Or to pay back the TARP money. They‘re saying, We‘re going to take some of this money in the cash drawer and give it to small business and small banks, force the Republicans to vote against it. Mark might be right, and they‘re going to keep voting against everything. But I think what Obama, Axelrod and Rahm are thinking of is...

MATTHEWS: Oh, OK...

FINEMAN: ... Let‘s design a series of votes that they don‘t dare say no to.

MATTHEWS: You know, in the military, they have the guy who goes out in front of the unit into the jungle and has to take the shots, the second lieutenant often, who gets the bullet?

HALPERIN: Right.

MATTHEWS: We have a president of the United States—not—just forget the ballistic—warfare references, he‘s out front. He‘s now taken it. He‘s the leader of the Democratic Party, the Congress—the Democratic Congress, the whole shebang. He‘s out there fighting it out like he‘s the candidate. Isn‘t that dangerous?

FINEMAN: Excuse me. Nancy Pelosi has a 7 percent approval rating. Harry Reid has a 3 percent, I mean, strongly positive rating in the NBC poll. That‘s part of the...

HALPERIN: But there‘s no one else who can do it. Reid increasingly is going to have to worry about saving himself anyway.

MATTHEWS: Right.

HALPERIN: The president has to do it.

MATTHEWS: Chris Dodd‘s retiring.

HALPERIN: Right. There‘s just—there‘s nobody. And look, in the media landscape in which we live, he can still dominate when he wants to. And when he‘s this good and when they schedule him this smartly, they win the day.

MATTHEWS: ... sowing it. He needs Bob Strauss, he needs John Connally, he needs Eddie Rendell, he needs Schumer, he needs guys in the government! I‘m sure Schumer‘s not joining the government, but he needs people like him.

Coming up: President Obama has vowed to end “Don‘t ask, don‘t tell,” and top Pentagon officials were on Capitol Hill making the case to end the policy. But how would the Pentagon go about doing it? How do they make the transition? How big a political fight would the president face in doing it?

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. The Pentagon‘s top two defense officials testified on Capitol Hill today in support of President Obama‘s plan to repeal the “Don‘t ask, don‘t tell” policy. Here‘s what the chairman of the Joint Chiefs, Admiral Michael Mullen, told the Senate Armed Services Committee today.

ADM. MIKE MULLEN, JOINT CHIEFS CHAIRMAN: It is my personal belief that allowing gays and lesbians to serve openly would be the right thing to do. No matter how I look at this issue, I cannot escape being troubled by the fact that we have in place a policy which forces young men and women to lie about who they are in order to defend their fellow citizens. For me personally, it comes down to integrity, theirs as individuals and ours as an institution.

(END VIDEO CLIP)

MATTHEWS: Republicans were resistant to the idea of overturning the policy of “Don‘t ask, don‘t tell.” So how much of a political fight does President Obama have on his hands right now? Aubrey Sarvis is executive director of Servicemembers Legal Defense Network, and Peter Sprigg is a senior fellow for policy at the Family Research Council.

Let me go first to Aubrey. You served in the military. You were in the Army. Where were you stationed? What kind of unit were you in?

AUBREY SARVIS, SERVICEMEMBERS LEGAL DEFENSE NETWORK: I was in the infantry. I was in South Korea, 7th Infantry Division. I was a sharpshooter.

MATTHEWS: And as a gay man, what was it like? You were not in the open, obviously. What was your experience in that regard? What did you learn in terms of this issue of whether gay people should be allowed to serve openly?

SARVIS: Well, by and large, even in the ‘60s, Chris, I found that gays and lesbians serving, most were serving in silence then. It was not a big deal. But all gays and lesbians want to serve openly. They want to be honest about their service to their country. And as Admiral Mullen said today, it comes down to integrity. And every service member counts, gay or straight.

MATTHEWS: Let me go to Peter. What is the argument against it in terms of actual performance in the barracks, in life, in the military? What gets in the way of military discipline in a crack unit? Your view?

Soldiers are put in positions of forced intimacy all the time. They shower together. They sleep together in the barracks. And it‘s simply unfair to put soldiers in a position of forced cohabitation with those who may be viewing them as a sexual object.

MATTHEWS: OK. Well...

SPRIGG: That is a formula guaranteed to lead to greater sexual tensions, sexual harassment, and even sexual assault.

MATTHEWS: But my dad was in the military. My brother‘s in the military. Everybody I know who has ever been in the military says there are gay people in the military. And they‘re known to be gay.

What are—you say we don‘t want to have a gay people are in forced intimacy with straight people, but isn‘t that case now; it‘s simply not official? Isn‘t that case now? Are you saying there are no gay people in the barracks or on submarines or in any other kind of intimate setting, as you put it?

SPRIGG: Well, to the extent that it is the case now, those...

(CROSSTALK)

MATTHEWS: Well, it is true, isn‘t it? First of all, let‘s agree on this. Are you questioning whether there are not sizable numbers of Americans who are—who have gay orientation, who are gay men and women who are serving in the military? Do you deny that, significant numbers of them right now?

SPRIGG: Well, I don‘t know how sizable or significant the numbers are. But I...

MATTHEWS: No, you‘re on television talking about an area I thought you knew something about. You don‘t know about what you‘re talking about?

SPRIGG: There are no polls of how many people are gay in the military, because, if they were to admit that, they would be...

(CROSSTALK)

MATTHEWS: Well, is a significant number? I‘m not asking you for a percentage. Do you deny that we in the history of our country have had an experience of gay men and women serving in the military, a significant experience? It‘s not new to us. Would you acknowledge that?

SPRIGG: There are people who have experienced homosexual attractions who have served in the military and do continue to serve in the military.

But they are restrained in their behavior by the current policy. If we had a policy where the—where people were considered bigoted if they were opposed to same-sex conduct, then there would be much greater danger of misconduct on the part of the homosexuals and much greater likelihood that people who are—object to that would simply choose not to serve at all.

NETWORK: Well, Chris, there‘s no data, there‘s no evidence to support the assertion that was just made by this gentleman.

SPRIGG: Well, there is -- 58 percent of currently serving members told “The Military Times” they would not support this.

(CROSSTALK)

SARVIS: And what this gentleman is suggesting and putting out on the table is insulting to our—to all service members, gay and straight.

It‘s about professionalism. Gay soldiers and sailors are professionals, as are their straight counterparts. At the end of the day, it‘s about professionalism. It‘s about getting the mission done. And it‘s not about your sexual preference or orientation.

SPRIGG: Well, that‘s exactly the point I‘m trying to make. The military should not be used as an avenue for social re-engineering. The purpose of the military is to fight and win wars. And we need the force that‘s most effect to do that.

(CROSSTALK)

MATTHEWS: OK. You go ahead. You go ahead.

SARVIS: Now, come on. The purpose of the military is to defend this country. We need every service member who is qualified to be on active duty today to be defending this country. Their sexual orientation is not a factor.

It‘s about the mission. It‘s about professionalism. And, as Admiral Mullen said today, it‘s about integrity. No one should have to lie to fight and die for this country.

I accept completely your right to make this case. This is an American debate which is very much alive, so I‘m not taking sides exactly in this debate, although I do have a position.

Let me ask you this. Do you—what should a young woman or man, say, 22 years old, out of college, officer material, they want to serve their country, but they‘re gay, what should they do? They want to serve their country. They‘re patriotic. What should they do?

SPRIGG: Well, they should serve it in some civilian capacity, and not join the military, because the military is...

MATTHEWS: Why not?

SPRIGG: Because the presence of homosexuals in the military is incompatible with good order, morale, discipline, and unit cohesion. That‘s exactly what Congress found in 1993. And that‘s what the law states.

(CROSSTALK)

SARVIS: Again, again, there is no data, there is no evidence, there is no study whatsoever that you can point to, to support that outrageous statement.

SPRIGG: Nothing...

SARVIS: I think what we have—and what I would also suggest to you is that 79 percent of Americans today support open service. They support gays and lesbians being able to serve their country openly.

Indeed, I would say to you that the latest Gallup polling shows that 61 percent of weekly churchgoers support gays and lesbians being able to serve openly. Indeed, 58 percent of conservatives support repeal of don‘t ask, don‘t tell.

SPRIGG: Well, don‘t ask, don‘t tell is the Clinton compromise policy, which is actually incompatible with the law that was passed by Congress.

There‘s almost universal misunderstanding about that. I would like to see us do away with this don‘t ask, don‘t tell, and simply enforce the law that was passed by Congress.

SARVIS: Well, what I hear you saying is that you believe that gays and lesbians should not serve their country in the uniform whatsoever.

SPRIGG: That‘s absolutely right.

SARVIS: Not only—not only are you opposed to repealing don‘t ask, don‘t tell. You would prohibit all gays and lesbians from serving their country right now...

SPRIGG: That‘s exactly right. And that would...

SARVIS: ... when we‘re fighting two wars, and we need every qualified trooper to be out there.

SPRIGG: The percentage of people, the—the number who would refuse to serve in the military if they‘re forced to serve with open homosexuals would dwarf the number of homosexuals who would actually volunteer.

SARVIS: There is no basis in fact for that assertion.

SPRIGG: There is. There‘s a “Military Times” poll which showed that 10 percent of currently serving military would consider not reenlisting if the military was open to homosexuals.

SARVIS: And that‘s a poll of the readers of “The Military Times,” which tends to be...

SPRIGG: Well, that‘s the only indication we have of the views of currently serving members.

MATTHEWS: Let me finish up here.

Let me ask you, Peter, do you think people choose to be gay?

SPRIGG: People do not choose to have same-sex attractions, but they do choose to engage in homosexual conduct. And that‘s conduct also which, incidentally, is against the law within the military. It violates the Uniform Code of Military Justice. It does not make any sense for us to be actively recruiting people who are going to violate the Uniform Code of Military Justice.

MATTHEWS: Do you think we should outlaw gay behavior?

SPRIGG: Well, I certainly...

(CROSSTALK)

MATTHEWS: I‘m just asking you, should we outlaw gay behavior?

SPRIGG: I think that the Supreme Court decision in Lawrence v. Texas, which overturned the sodomy laws in this country, was wrongly decided. I think there would be a place for criminal sanctions against homosexual behavior.

First, Congresswoman Michele Bachmann on the offensive. Yesterday, at a Minnesota town hall, she rolled out a new attack line against health care. She predicts the government of the United States could eventually use health care to limit free speech, to punish those who disagree with the government.

Here‘s the congresswoman with an anecdote she said she got from a friend living overseas.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN ®, MINNESOTA: This is something that people don‘t know. In Japan, people have stopped voicing their opinion on health care. There‘s things that are wrong with Japanese health care, but people started voicing. Well, why is that again?

He said, it‘s because they know that they would get on a list and they wouldn‘t get health care. They wouldn‘t get in. They wouldn‘t get seen. And, so, people are afraid. They‘re afraid to speak back to government.

They‘re afraid to say anything.

Is that what we want for our future? And we aren‘t going to give up. We‘re not going to quit fighting, because government takeover of health care is the crown jewel of socialism.

(APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: So, the government‘s going to get you like they do in Japan. Wait until Japan hears this charge.

Anyway, Michele Bachmann is going for the title. She‘s the one who said, by the way, that she anti-Semitism the media, us, to investigate Democratic members of the U.S. Congress for anti-American attitudes. But she‘s the one who wants to sick the thought police on the people, not the Japanese government or this government.

It reminds me of what Huey Long once said. If fascism ever comes to America, it will be called anti-fascism.

Next, a wild new poll of Republicans came out. It‘s conducted by Research 2000 and sponsored by the progressive blog Daily Kos. Catch these figures. Fifty-eight percent of Republicans polled say no or not sure when asked if President Obama was born in the U.S. Whoa.

Seventy-nine percent say yes or no or not sure, rather, to the question of whether he‘s a socialist -- 64 percent, about two-thirds, say yes or not sure on if the president‘s a racist who hates white people. And 57 percent of Republicans say yes or not sure on whether he wants the terrorists to win.

And here‘s the wildest number of them all, tonight‘s HARDBALL “Big Number.”

How many Republicans in this poll think President Obama should be impeached? Sixty-eight percent said yes or not sure to the question of whether Barack Obama should be impeached now. I guess, if you think the guy‘s an illegal immigrant, you figure he‘s got to be impeached. Sixty-eight percent of Republicans say either yes or not sure on impeachment on this president—tonight‘s hard-to-fathom “Big Number.”

Up next: The Academy Award nominees are out. What do the nominated movies say about the big issues facing Americans today? This is going to be fun.

Stocks rallying again today on some reassuring corporate earnings and more signs of stabilization in the housing sector. Another triple-digit gain for the Dow, up 111 points, the S&P 500 adding 14, and the Nasdaq climbing nearly 19 points.

UPS kicking off today‘s rally, posting a profit of 75 cents a share. The shipping giant is also raising its profit outlook. FedEx also benefiting from improving demand. Shares are up a little bit more than 2 percent at the close.

And Ford posting a 35 percent jump in January sales, shares climbing almost 2.5 percent.

Media giant News Corp. reporting just after the closing bell, beating on both earnings and revenue, big gains for the quarter, not even taking into account the mega-hit “Avatar.” Most of those earnings will show up on next quarter‘s report.

When we go to the movies, we go for entertainment, obviously, but we also don‘t mind if the movie connects with us on some personal level, that it‘s relevant to the world we actually live in. This year‘s nominees for Academy Awards that came out this morning are a great sampling of what‘s on our minds and in our hearts in the year 2010.

“Up in the Air” is about a guy who travels around the country firing people. It‘s about the humiliation of it all, especially among middle-class middle-aged people who get the sack. “The Hurt Locker” is about the hell of Iraq and a war of IEDs, where your next step could blow you to kingdom come. What a war.

And race relations took center stage in movies like “The Blind Side” about adoptive parental love, about—and “Precious,” which is about poverty and despair, and James Cameron—Cameron‘s “Avatar,” a science fiction on the surface that‘s really about the exploitation of one race over another, which some recognize in this movie as the exploitation of whites over North American Indians back 300 years ago.

Let‘s turn to our film experts, “Vanity Fair”‘s Michael Wolff and Paul Farhi, who is a “Washington Post” critic.

Let me go with Michael.

It seems this year that, that first movie we talked about, “Up in the Air,” is so much about right now, the cold separation of labor from humanity, that corporations are cold in their hiring and firing, that you‘re just a number. In fact, you bring in—you outsource firing. You bring in some cold-hearted guy to fire you, Michael.

But, completely, it‘s a movie that you sit there with your mouth wide open, and you think two things. You think, geez, I‘m glad I‘m not in an airport, and I‘m glad I‘m not being fired by a guy who‘s always in an airport.

MATTHEWS: Paul Farhi, your thoughts about this selection? This movie‘s in the top ranks of movies that might win best picture. It‘s so today.

PAUL FARHI, “THE WASHINGTON POST”: It‘s totally today. And, in fact, it benefited enormously by its timing. It was delayed somewhat, finally came out in the teeth of the recession.

And it could not have been more appropriate to the period in which it‘s appearing. It‘s exactly as you say. It‘s the coldheartedness of corporations. Who doesn‘t feel that these days?

MATTHEWS: Well, let‘s take a look at a movie that‘s about a different kind of war, not a John Wayne war, or even an imaginary war like John Wayne may have been in, and certainly those romanticized notions of war.

Here‘s one about a war that‘s about IEDs, about booby traps, about IEDs, these explosive devices that can go off at any moment, blow your legs off, blow your heart away, kill you, ruin your life. And this guy has the job of defusing them, this incredibly nervy guy played by Jeremy Renner.

MATTHEWS: Michael Wolf, it wasn‘t exactly a movie. It‘s something else. It‘s Catherine Bigelow‘s incredible look at what it‘s like to be walking every day of your life, when every step can blow you to smithereens.

MICHAEL WOLFF, “VANITY FAIR”: It just goes on and on, this movie. You watch it and you think, I can‘t—you know, can this—will this ever end. Please let it end. But you‘re actually riveted to it, and hoping it will go on and on. It‘s really quite something.

MATTHEWS: Paul, it‘s a different kind of war. It‘s not about—it‘s a different kind of gallantry it calls for. It‘s not being a better shot than the other guy. It‘s about almost just being a sitting duck, in many ways, when you get in a car and drive somewhere and the car blows up, and you walk down the street—look at this. We‘re watching some of the scenes of these bombs being constantly set everywhere.

FARHI: The disturbing thing about the movie, too, is that Jeremy Renner‘s character is actually sort of crazy. He‘s not just heroic. Had goes beyond heroic, and almost into sort of insanity in his bravery. It‘s quite something to watch.

MATTHEWS: Yeah. Here‘s another movie. There‘s a lot of the movies this year that I find a racial—sometimes a positive view. Certainly in some days a contemptory (ph) look at racial repression, with this “Avatar,” about our colonizing or exploiting the resources of another planet, and basically getting—killing anybody in our way, in a way that maybe we did when we first got to this—white people did when they first got to North America.

Here‘s one that‘s really heart warming. I really like this movie. I know it was controversial. This is Sandra Bullock in the part of her lifetime. Here she is Sandra Bullock, as the white woman who brings in this young kid and lets him grow up a positive way.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Does Michael get a family discount at Taco Bell? Because if he does, Sean‘s going to lose a few stores.

SANDRA BULLOCK, ACTRESS: He‘s a good kid.

UNIDENTIFIED FEMALE: I say you make it official and just adopt him.

BULLOCK: He‘s going to be 18 in a few months. It doesn‘t really make much sense to legally adopt.

UNIDENTIFIED FEMALE: Leanne (ph), is this some sort of white guilt thing?

UNIDENTIFIED FEMALE: What will your daddy say?

BULLOCK: Before or after he turns over in his grave? Daddy‘s been gone five years, Elaine (ph). Make matters worse, you were at the funeral. Remember? You wore Chanel and that awful black hat.

MATTHEWS: Amazing scene, Michael. I loved—I don‘t know what you thought of that movie. I loved it. Your thoughts?

WOLFF: You know, absolutely. And I think that there‘s a larger point here that this is a great time to be a movie-maker. There aren‘t all that many times when you can swing at subjects like this. And so this particular moment in time, when everybody—I mean, there‘s this enormous allowance of everybody saying, it‘s there; it‘s a problem; we all feel it. It gives you as a movie-maker an incredible opportunity.

FARHI: You know what stroke me about “The Blind Side,” which is the same thing that struck me about “Avatar,” which is that the white people hold the solution to the minority people‘s problems. It‘s only through white action that the people in “Avatar” can solve the problem. And the only way this kid in “The Blind Side” can have a better life is through white action.

WOLFF: Well, Paul, it‘s still Hollywood.

FARHI: It is. But that‘s the racial dynamic involved in the show—in both movies, though.

MATTHEWS: Paul, I know that argument that the white people—this woman, Sandra Bullock, is looking too good. But, you know, I think that scene when she took on her peer group, this upper middle class peer group, and basically shoved it back at them, and said, I don‘t care about your value system; I‘m not here to appeal to what my daddy thought—I‘m trying to make these points a lot of nights around here. If we sat around and tried to judge this country the way our parents went around, we wouldn‘t be getting anywhere. You‘ve got to move forward.

FARHI: The problem is that the black character is basically a prop to make the white people feel better about themselves. That‘s been the major criticism.

It‘s also the Magic Negro. In other words, the idea that a black character will emerge to provide wisdom for the white people involved in the movie.

WOLFF: At the same time, the really interesting things is that these movies are incredibly successful at this point in time. And I don‘t think that would have been the case as recently as a couple of years ago.

FARHI: I actually disagree, because that character goes back a long time in movie history. This not something new. “The Green Mile” came out ten years ago. It was the same kind of portrayal.

MATTHEWS: You know what, when you see the movie, you have your own reaction. I accept all those criticisms. In fact, sociologically, Paul, I agree with you, but I liked the movie a lot. Maybe it was Sandra Bullock.

I agree with your points, but I loved the movie. Sometimes that happens. Michael Wolff and Paul Farhi, thank you, gentlemen, for joining us. It‘s going to be a great Oscar night.

Up next, it‘s primary day in Illinois tonight. Voters there are choosing candidates for the Senate and the governor‘s seat. This, of course, Barack Obama‘s home state. What will their choices say about what we can expect in November‘s midterms? I think we‘re going to start seeing a trend. If the Republicans unite today, there‘s trouble for the Democrats. This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We‘re back. The 2010 election cycle officially kicks off today with a big primary in Illinois, where voters are deciding the nominees for US Senate and governor of that state, jobs that used to belong to Barack Obama and Rod Blagojevich. Are they as angry in Illinois as they were in Massachusetts a few weeks back? And what‘s the White House—what‘s the president have riding on today‘s vote?

Lynn Sweet, an expert in Chi-Town politics, is the Washington bureau chief of the “Chicago Sun Times” and a columnist for PoliticsDaily.com, and John Heilemann is the best-selling author of “Game Change,” also a reporter for “New York” Magazine.

Let me go to Lynn Sweet on the ground. Lynn, this race, what skin does the president have in this race in the sense that he‘d like—let me ask you the question. What skin does he have in the game.

LYNN SWEET, “CHICAGO SUN TIMES”: He‘s got a lot of skin because Illinois is going to used, if nothing else, as a big fund-raising appeal for the national Republicans starting tomorrow morning. We are the first in the primary states. It is his state and it is his seat. Symbolically, he has a lot of skin in the game.

Also, you have a lot of Chicagoans in the White House, who are supposed to know a thing or two about winning Illinois elections. Chris, as we start out here, the Democrats are not the favorite to win in November.

MATTHEWS: Let‘s take a look at the old anti-incumbent thing. We‘ve got an incumbent governor who went in for—lieutenant governor took over for Blagojevich. You‘ve got the president‘s own Senate seat there. Is the party going to suffer, the Democratic party going to suffer? Is Pat Quinn, the governor, going to be punished for being an incumbent?

HEILEMANN: It‘s very interesting. Obviously, the anti-incumbent feeling is everywhere in the country. If you look at Illinois, it‘s a state that went from, back in the days before Bill Clinton, being a solid red state to then being a purple state, then being the bluest of blue states. Now it is up for grabs. This is a big thing if Illinois ends up drifting back toward the purple or towards the red category.

MATTHEWS: Is the worst result for the Democrats tonight if they pick up the paper or look on the blogs or online tonight and they see that Kirk, the Republican, has won a big victory for the Senate nomination, so it looks like they‘re united for the fall? Is that bad news for the D‘s?

SWEET: That news is out already, Chris. The Illinois Republicans put aside, in this instance, their big divides between conservative and moderate ideological differences. They didn‘t have the fight. They united around Mark Kirk, who by the way has run a Rose Garden campaign. He never campaigned publicly here, in order not to give his rivals any ammunition.

So the Democrats are the one in disarray. Starting tomorrow, it is the Republicans that are unity. Haley Barbour, the governor of Mississippi, supposed to be here for a unity breakfast tomorrow. Democrats don‘t have anything planned.

MATTHEWS: What about the seat that the president held at, that Burris holds now—Roland Burris holds now by appointment? He got that appointment by Blagojevich, and he basically got killed by that very fact. Here he is right now. We got to know him on this show. That seat, the president‘s seat, where is that likely to go? Does Cheryl Jackson have a chance? Does the state treasure have that thing pretty much under control?

SWEET: Right now, I wouldn‘t make any predictions right now. The race heated up in the end. I wouldn‘t call it this close. There are some other—there is the potential for a big African-American turnout. She is the only female and African American in the race.

The state treasurer has been in the lead for most of the campaign. The race tightened up in these last few days. A lot of negative campaigning going on, mainly by David Houghman (ph), who is the former city hall inspector general, who had enough money to go on TV. Chris, negative ads were continuing up through this afternoon, in both the governor and Senate races on both sides. Very angry group of people out here.

MATTHEWS: Hang on there, Lynn Sweet of “Chicago Sun Times,” John Heilemann of “New York Magazine,” author of “Game Change.” We‘re going to come back and talk about the president as a candidate again. He is out there acting like a candidate again. I wonder what it is all about. We‘ll find out on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We‘re back with Lynn Sweet of the “Chicago Sun Times” and “New York” Magazine‘s John Heilemann. Here‘s more of the president up at his town hall in New Hampshire today. Let‘s listen.

OBAMA: We‘ve got two parties in this country. That‘s a good thing. It means we have heated debates and vigorous disagreements. So I was very pleased when the House Republican caucus graciously invited me to attend their retreat last week. You know? We had a good time for more than an hour—for more than an hour, we had a frank exchange about the issues facing our country. We aired some of our grievances. We shared some ideas.

There were plenty of this on which we didn‘t agree, but there were also some things on which we did, and even more things that we should agree on if we could just focus on solving problems instead of scoring political points.

(END VIDEO CLIP)

MATTHEWS: Lynn Sweet, you follow politics closely. What is the president‘s game? What‘s he up to getting out there like a candidate?

SWEET: Well, he needs to rally his troops and he has to change the narrative, which has always been a big problem with him in the last few weeks, when he‘s been at the low point of his presidency. He has to get ahead of what I think is this stall that he‘s in right now, Chris.

MATTHEWS: John, is that it? To get us away from looking at the economic numbers, get us away from looking at the failures so far of health care, get us away from looking at Harry Reid and the rest of the Democratic leadership that doesn‘t seem to be helping him right now? Is that it?

HEILEMANN: I think all those things are part of the story. But I think there are two bigger things that the White House has seen post-Massachusetts that they have to do. One is they have to start winning the outside game again. They were too mired in the inside game, all this legislative process. They‘re getting him out of Washington.

Two, they got to make the Republicans pay for their intransigence.

If they continue just to let the Republicans stone wall against them --

MATTHEWS: How do they do that? How do they make them pay? How do you get a guy like Mitch McConnell, who sits back there pompously laughing at him, and John Cornyn and those guys—how do you make them pay for being against everything that tries to solve the country‘s problems?

HEILEMANN: He did a very nice job today when he pointed out the ways in which the Republicans who had signed on to the bipartisan commission to deal with the deficit issue—how those people signed on, suddenly, as soon as Obama endorse it, they all bailed out. He has got to call them on their hypocrisy.

You and have talked about this before. On health care, I think he should haul Republicans up to the White House, sit down and say, what do we agree on? What do you want for me to get your help?

(CROSS TALK)

SWEET: When you do that, though, you‘re going back to the incremental approach that they disavowed in the beginning on health care, because they always said they wanted to do the whole thing. The other thing, John and Chris, in the end, the test here is when the next big initiative comes up before Congress, will Obama get a bipartisan—

MATTHEWS: Thank you, Lynn Sweet. Thank you, John Heilemann. Right now it is time for “THE ED SHOW” with Ed Schultz.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

END

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